MILLER CHAPTER 11 CONTRACTS NATURE AND TERMINOLOGY 2015

MILLER CHAPTER 11: CONTRACTS – NATURE AND TERMINOLOGY © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

§ 1: OVERVIEWOF CONTRACT LAW u Sources of Contract Law. Common Law for all contracts except sales and leases. Sale and lease contracts - Uniform Commercial Code (UCC). © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 2

OVERVIEW OF CONTRACT LAW u Function of Contract Law. Provides stability and predictability for commerce. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3

OVERVIEW OF CONTRACT LAW u Definition of a Contract. Promise or set of promises, For breach of which, The law provides a remedy, or The performance of which the law in some way recognizes as a duty. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 4

OVERVIEW OF CONTRACT LAW u Objective Theory of Contacts. Circumstances to determine intent of parties. Objective Facts include: • What a party said when entering into the contract, • How the party acted or appeared (intent may be inferred), and --> © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5

OVERVIEW OF CONTRACT LAW u Objective Theory of Contacts. Objective Facts include: • Circumstances surrounding the transaction. • CASE 11. 1 PAN HANDLE REALTY, LLC V. OLINS (2013). © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6

§ 2: ELEMENTSOF A CONTRACT u Requirements: Agreement (Offer and Acceptance). Consideration: bargained-forexchange. Contractual Capacity. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7 7

ELEMENTS OF A CONTRACT u Requirements: Legality: purpose of contract must be legal at the time of execution. u Defenses to Enforceability: Voluntary Consent. Form: some types of contracts must be in writing. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8

§ 3: TYPES OF CONTRACTS © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9

TYPES OF CONTRACTS u Bilateral - Offeree must only promise to perform (“promise for a promise”). © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 10

TYPES OF CONTRACTS u Unilateral - Offeree can accept the offer only by completing the contract performance (“a promise for an act”). Irrevocable: Offer cannot be revoked once performance has begun. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11

TYPES OF CONTRACTS u Formal versus Informal Contracts. Formal: must be in writing to be enforceable. Informal: all other contracts. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 12

TYPES OF CONTRACTS u Express: Words (oral or written). u Implied (In Fact): Conduct creates and defines the terms of the contract. Requirements: PL furnished good or service PL expected to be paid DEF had chance to reject and did not. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 13

TYPES OF CONTRACTS u Contract Performance. Executed - A contract that has been fully performed on both sides. Executory - A contract that has not been fully performed on either side. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14

TYPES OF CONTRACTS u Contract Enforceability. Valid: agreement, consideration, contractual capacity, and legality. Void: no contract. Voidable (unenforceable). © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15

CONTRACT ENFORCEABILITY © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 16

§ 4: QUASI- CONTRACTS u Quasi Contracts implied in law. Equitable remedy created by courts, and imposed on parties in the interest of fairness and justice. Quantum Meruit. CASE 11. 2 SEAWEST SERVICES ASS’N V. COPENHAVER (2012). © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 17

QUASI- CONTRACTS u Limitations Remedy: on Quasi-Contractual Enriched party is not held liable in certain situations dealing with benefit is conferred unnecessarily, negligently or by misconduct. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18 18

QUASI- CONTRACTS u When an Actual Contract Exists: ordinarily there is no quasicontract created at law. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19

§ 5: INTERPRETATIONOF CONTRACTS u “Plain Meaning” Rule. Courts will not admit “extrinsic” (external) testimony or evidence if meaning of contract terms are clear and unambiguous. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20

INTERPRETATION OF CONTRACTS u “Plain Meaning” Rule. However, if terms are unclear or ambiguous, court may admit “extrinsic” (external) evidence. CASE 11. 3 WAGNER V. COLUMBIA PICTURES INDUSTRIES, INC. (2004). © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21

INTERPRETATION OF CONTRACTS u Other Rules of Interpretation. Contracts are interpreted as a whole. Terms that are negotiated separately given greater weight. Words given ordinary, common meaning. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22

INTERPRETATION OF CONTRACTS u Other Rules of Interpretation. Specific wording given greater weight than general language. Written or typewritten given greater weight than preprinted. Ambiguous terms interpreted against the drafter. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23

INTERPRETATION OF CONTRACTS u Other Rules of Interpretation. Trade usage, prior dealing, course of performance to allowed to clarify. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24